Egyptian Govt has No Intention to Abolish Subsidies

Petroleum Minister Osama Kamal said the government has no intention of canceling subsidies of petroleum products from which the poor benefit.

In an interview with state TV that was broadcast Sunday, Kamal said the government’s goal is “not to make money but to serve the citizen,” and added that the government is not planning to cancel subsidies. The minister added that the country’s petroleum and gas reserves are sufficient to cater to the needs of the country for the coming 17 and 20 years, respectively.

The state pays LE20 billion in butane gas subsidies and LE50 billion in diesel subsidies every year. The subisidies particularly benefit the poorest citizens in the country.

The 2012/13 budget allocated LE70 billion to petroleum products subsidies, down from LE95 million in the previous budget, which had risen to LE116 with actual consumption. Kamal added that tourist hotels and private schools and universities will not receive subsidies.

A government source had told Al-Masry Al-Youm that Prime Minister Hesham Qandil presented a plan to reduce petroleum subsidies by LE25.5 billion.

The same source, who spoke on condition of anonymity, had said Morsy met with Qandil and economic ministers Sunday to discuss subsidies and specify a timeline for abolishing subsidies. The source added that the discussion focused on whether to cancel the subsidies in October or after the parliamentary elections.

The source had said Morsy gave directions not to increase the price of petroleum products and to ensure they remain stable after the system to reduce energy consumption is implemented.

The source had added that the International Monetary Fund was awaiting serious and effective steps made by the government to resume negotiations with Egypt concerning its request for a loan worth $US4.8 billion.